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Executive Summary The purpose of this review is to identify immigration programs for entrepreneurs that best align with PEI s provincial objectives related to retention, rural development, business succession planning and population growth. Given the demographic realities of an aging population facing many developed countries, immigration policy has become a cornerstone of economic development. National, regional and provincial economies across Canada are ever-changing and diverse. Furthermore, the migration patterns of immigrants are increasingly dynamic as countries compete to attract the best and brightest foreign nationals. Immigration in Canada is an area of concurrent jurisdiction between federal, provincial, and territorial (FPT) governments under the Constitution Act, 1867. As a result, Provinces and Territories have significant responsibilities in managing and shaping Canada s immigration programs. The context and strategic priorities for shared work on immigration and integration matters are set by the Forum of Ministers Responsible for Immigration (FMRI) including defining and implementing common goals for collaboration and action to ensure effective functioning of the national immigration system. Immigration policy at the federal and provincial level has remained dynamic in response to the changing needs of the national and local economies as well as the immigration patterns of foreign nationals. One of the challenges that exist with immigration continues to be the gravitation to large urban centers. Since 1998, in recognition of the need to ensure all areas of Canada benefit from immigration the Federal government negotiated agreements with provinces and territories that included provisions for Provincial Nominee Programs (PNP). The Prince Edward Island Provincial Nominee Program (PEIPNP) was introduced in 2001 through an agreement with Citizenship and Immigration Canada (CIC) (now Immigration, Refugees, and Citizenship Canada (IRCC)) to better align immigration with the economic development priorities of the Province of Prince Edward Island. Delivered by Island Investment Development Inc. (IIDI), the PNP is intended to attract immigrants with the skills, experience and economic means to successfully establish themselves on Prince Edward Island, and expedite the immigration process for them. The agreement aims to: Respond to the labour market needs of businesses operating on Prince Edward Island; Increase investment and performance in targeted sectors; 2
Establish new or enhance existing businesses; Retain newcomers and build stronger immigrant communities; and Contribute to population growth targets. In 2018, ten provinces/territories have at least one business immigration stream. This review has noted that the majority of provinces have moved away from a one-step or Escrow Model to a two-step or Work Permit Model. The provinces work in consultation with the federal government to open, close or amend PNP streams in response to the changing local economy. Today, Canada faces a much different business immigration environment at home and abroad. Domestically, federal, provincial and territorial governments continue to enact reforms as they seek to increase the success of their business immigration programs. Likewise, Prince Edward Island continually assesses and evaluates immigration programs to confirm they are consistent with the province s economic development goals while remaining relevant in an increasingly competitive immigration environment. It has become evident through this review that moving to a work permit model and closing the escrow streams will improve provincial outcomes. 3
Why Immigration? Economists have noted that Canada would face a stagnant economy and significant population declines in absence of a strong immigration plan focused on growth in economic categories. With aging populations and declining birth rates, ensuring population growth to stimulate economies is paramount. Dubbed the grey region, the pressure of aging populations is felt greatest in Atlantic Canada with the highest percentage of residents over 65 years of age. The Conference Board of Canada has released information summarizing the importance of immigration noted below. As employers struggle with ongoing vacancies, and entrepreneurs look for succession opportunities and growth, immigration has become a viable consideration. The Conference Board of Canada has noted that if Canada is to meet workforce requirements, by 2035 there would be 350,000 immigrants required to meet forecast based on declining domestic workforce. 4
Economic Immigrations Programs Immigration continues to be a key component of population and economic plans in most OECD countries. With declining populations from lower birth rates and aging population, the future economic growth is primarily reliant on immigration. Canada has been a destination of choice for many foreign nationals. The growth in Canada s workforce has primarily been from immigration. Policy makers have been lobbying the federal government to ensure the representation of economic immigration increases to support population and workforce requirements. The current three year plan reflects the federal government s commitment to ensure that economic immigration increases to support the economic requirements of the country. With a target of 177,500 admissions in 2018, economic Immigration represents 57% of the overall immigration plan. Canada s Immigration 3 Year Targets Immigration Category 2018 Target 2019 Target 2020 Target Economic 177,500 191,600 195,800 Family 86,000 88,500 91,000 Refugees and Protected Persons 43,000 45,650 48,700 Humanitarian and Other 3,500 4,250 4,500 Planned Permanent Resident Admissions 310,000 330,000 340,000 5
The Economic Immigration 2018 Targets: The economic pathways are comprised of streams administered by the federal government (Express Entry and Caregivers), Provincial Nominee Programs, Quebec Skilled Workers and Business, and the Atlantic Immigration Pilot Program. The 177,500 is summarized below: Express Entry Federal Programs (Federal Skilled Worker, Federal Skilled Trade and Canadian Experience Class) = 74,900 Provincial Nominee Programs = 55,000 Quebec Skilled Workers and Business = 28,900 Caregivers = 17,000 2018 Economic Immigration Federal Programs 1% 0% Quebec Programs 10% PNPs 42% Federal Business 31% Caregivers Atlantic Immigration Pilot = 1,000 Federal Business = 700 16% Atlantic Pilot Federal Provincial Immigration Agreement (Provincial Nominee Programs) Provincial Nominee Programs are in place in nine provinces and two territories (Quebec has sole responsibility for Immigration and Nunavut has not signed an agreement) with outlined responsibilities noted in the federal-provincial immigration agreements. The agreements vary slightly based on timing of negotiations and renewals. The Provincial Nominee Programs are annexes to the agreement and provide the provinces with the ability to design programs that meet provincial objectives. Agreement Date Signed Term Canada Manitoba Immigration Agreement October 1996 (renewed June 2003) Permanent Canada Saskatchewan Immigration Agreement March 1998 (renewed May 2005) Permanent Canada British Columbia Immigration Agreement May 1998 (renewed April 2015) 5 years Canada New Brunswick Immigration Agreement Canada Newfoundland and Labrador Immigration Agreement Canada Prince Edward Island Cooperation on Immigration Agreement February 1999 (renewed March 2017) September 1999 (renewed July 2016) March 2001 (renewed June 2008) 5 years 5 years Permanent 6
Canada Yukon Cooperation on Immigration Agreement May 2008 5 years Canada Alberta Cooperation on Immigration Agreement March 2002 (renewed May 2007) Permanent Canada Nova Scotia Immigration Agreement Canada Ontario Immigration Agreement Canada Northwest Territories Nominee Agreement August 2002 (renewed September 2007) November 2005 (renewed November 2017) August 2009 (renewed October 2013) Permanent 5 years 5 years *Canada Quebec Accord signed February 1991 Provincial Nominee Programs (PNPs) allow participating Canadian provinces and territories to nominate a set number of immigrants for Canadian permanent residence each year. The process of recruiting, nominating and granting permanent residency in Canada is a shared responsibility between the federal and provincial governments. While the provinces can nominate applicants who meet the respective provincial requirements, the federal government has the ultimate authority on their admissibility and this includes issuance and renewal of permanent residency. With planned admissions of 55,000, PNPs will be responsible for more than 30 per cent of economic immigration to Canada in 2018. Percent of Total Economic Immigration 29.6% 51,000 Provincial Nominee Programs 30.9% 55,000 31.8% 61,000 34.6% 67,800 2017 TARGET 2018 TARGET 2019 TARGET 2020 TARGET Provincial Nominee Programs 7
Prince Edward Island Provincial Nominations On an annual basis, all Provinces receive a provincial nomination allocation from the Department of Immigration, Refugees and Citizenship Canada. Prince Edward Island Nominations 2012 2013 2014 2015 2016 2017 2018 2019 2020 Nominations* Planned (reliant on federal allocation levels) Business/Entrepreneur 270 287 294 345 339 310 150 75-100 100-150 Labour 183 128 123 153 161 240 350 400-425 350-400 Express Entry 189 375 337 350 350 350 Atlantic Pilot** 120 220 220 220 Total 453 415 417 687 875 1,007 1,070 1,070 1,070 *Nominations represent family units ** Atlantic Immigration Pilot is pending renegotiation as the current agreement expires in 2019 The nomination levels provided to each province and territory are categorized as base (includes provincial nominations for entrepreneurs and labour streams) and enhanced (includes provincial nominations for candidates that meet federal express entry criteria). The 2018 allocation for Prince Edward Island is 500 base and 350 enhanced nominations for PNP as well as 220 for the Atlantic Immigration Pilot. Over the past three years there has been continuous growth in streams supporting workforce as noted in the chart below. The introduction of the Express Entry program in 2015 and the Atlantic Immigration Pilot in 2017 has brought the planned nominations in support of workforce to 85% of activity in 2018. It is expected the federal nomination allocation for Prince Edward Island will remain consistent at 1,070 family units per year (2018-2020). 8
*Nominations are for family units (each family unit on average is 2.3 persons) Recommendation #1: At the beginning of each fiscal year, the Province of Prince Edward Island should post on their website planned nomination levels for each category of provincial immigration programs once the federal government has provided confirmation. Background Immigrant Entrepreneurs Among the many economic development priorities for Canada, attracting foreign investment and talent has been paramount dating back to the first entrepreneur and investor programs opened in 1978. In 1978 the Entrepreneur Program and the Self-Employed Program were launched. In 1986 Canada opened the Immigrant Investor Program (IIP), the second country in the world to open such a program. In the decades to follow, Canada was a leading destination for business immigrants with over 10,000 principal applicants annually. The Immigrant Investor Program suspended intake in 2012 and was closed in 2014 as the federal government suggested there was little evidence that immigrant investors were maintaining ties to Canada or making a positive economic contribution to the country. The program was replaced by the Immigrant Investor Capital Fund Pilot, which has been criticized as yielding small returns to Canada with minimal participation. Candidates with a net worth of $10 million or more must invest $2 million in the fund for a period of 15 years. In addition the federal government has two other streams for business immigrants, the Self-Employed Program (suspended April 2018) and the Start-up Visa. The streams have had small numbers of permanent resident admissions over the past number of years and planned admissions for 2018 are 700 permanent residents. United States UB-5 Visa Program US Congress created the EB-5 visa program in 1990 to stimulate the economy and job creation. Investors receive conditional permanent residence (a green card) for 2 years and must invest 9
US$1 million, or US$500,000 if they are investing in a targeted employment area whose unemployment rate is 150% of the national average or in a rural area. After 2 years, investors must demonstrate they directly or indirectly created or preserved at least 10 full-time jobs to retain their permanent residence. While the EB-5 visa program has been popular over the past 10 years attracting between US$2 billion and US$4 billion annually, it has been subject to some scrutiny especially with regards to what constitutes a targeted employment area. It is thought that the EB-5 visa program places disproportional risk to foreign investors as they have little control on their outcomes of the investment projects. Global The global boom in business immigration programs is largely being fueled by the rise in affluence around the world. Until the 2000 s, only a few countries had business immigration programs. Recently, more countries have launched programs as they seek out the many benefits that business immigration can provide a host country. Generally the benefits fall into two categories: direct economic benefit of the investment and the immigrant s human capital. Provincial Nominee Program - Business Immigration There are currently ten provinces and territories in Canada operating 17 business streams in Provincial Nominee Programs. The following is a summary of the programs, launch dates and operational requirements noting if they are a work permit or escrow model. Province/Territory Program Launch Date Work Permit or Escrow Alberta Self-Employed Farmer 2004 Work Permit (with a deposit) British Columbia Entrepreneur Immigration 2016 Work Permit Strategic Projects 2016 Work Permit Manitoba Business Investor Pathway 2018 Work Permit Farm Investor Pathway 2017 Work Permit NWT Business Stream 2015 Work Permit Yukon Business Nominee Program 2002 Work Permit Nova Scotia Entrepreneur 2016 Work Permit International Grad 2016 Work Permit Entrepreneur Ontario OINP Entrepreneur Stream 2015 Work Permit OINP Corporate Stream 2015 Work Permit Prince Edward Island 100% Ownership 2012 Escrow Partial Ownership 2012 Escrow Work Permit 2012 Work Permit 10
Saskatchewan Entrepreneur 2015 Work Permit Farm Ownership 2007 Work Permit (with a deposit) New Brunswick Entrepreneur 2017 Escrow There are currently eight provinces and territories operating business streams under the Provincial Nominee Program via work permit models. This pathway uses a temporary to permanent, where foreign nationals invited by the province arrive on a temporary work permit while fulfilling the requirements set out in a Business Performance Agreement. The province would nominate for permanent residency after the foreign national has met all criteria. The infograph below demonstrates the Work Permit model: 11
Nomination from the Province of Prince Edward Island in a work permit model would be after the foreign national has met all terms and conditions of the agreement. The nomination can be revoked during federal processing for permanent residency if the foreign national is no longer residing in the province. Over the past few years, while most provinces/territories offered a direct permanent residence (escrow) program they transitioned to work permit models. Currently PEI and New Brunswick 12
are the only provinces that incorporate this model. The infograph below demonstrates the escrow model. Nomination from the Province of Prince Edward Island is before the foreign national has met all terms and conditions of the agreement and is based on intent to comply. The foreign national receives permanent residency when they land in Canada prior to residing in the province and meeting terms and conditions. Should the foreign national not comply with the terms and conditions the escrow is defaulted however permanent residency has been granted. To maintain permanent residency, the foreign national is responsible to meet federal requirements and apply for renewal after 5 years. 13
Over time many provinces transitioned away from the escrow model and moved solely to the work permit model. This model allows the province to focus on assessing the business outcomes of the immigrant entrepreneur within the terms of the Performance Agreement prior to nominating for permanent residency. The temporary to permanent model shifts the burden of risk to the foreign national as the family arrives in Canada as temporary residents until such time as they meet all obligations. Provinces that have evolved business programs from escrow models to work permit models have noted improved outcomes. While the escrow model has noted improved outcomes with refunds exceeding defaults in 2017/18, the Province believes to meet provincial objectives to improve retention and business outcomes additional changes are required. Escrow Decisions 2015-2018 Year Refunds Refund % Defaults Default % 2015/2016 Actual 28 39.4% 43 60.6% 2016/2017 Actual 92 34.7% 177 65.3% 2017/2018 Actual 188 53.7% 166 46.3% 3 Year Total 308 44.4% 386 55.6% While the escrow model has been showing improvement as noted in the above table, a work permit model should lead to higher retention and success of our applicants. More specifically only applicants that comply with their undertaking to open a business are nominated for permanent residency under the work permit model as opposed to the escrow. It should be noted we have seen some very good success through our escrow stream with new Islanders contributing to the economic and cultural community. However with the transition we believe we will have a higher rate of success. 14
In an effort to improve provincial outcomes, the province of Prince Edward Island announced on September 12, 2018 the escrow model of the PNP business programs would be closed. The business program will operate as an Entrepreneur Work Permit program effective September 21, 2018. This will align Prince Edward Island with provincial counterparts. Retention Rates Statistics Canada conducts analysis of immigrant retention from the Longitudinal Immigration Database linking administrative immigration information such as landings with immigrant tax filer data. The analysis cover various time frames (10 yrs, 5 yrs, 2 yrs, and 1 yr). The most recent publication released was November 27, 2017 covering the 2015 tax filer data thus making it a challenge to measure current programming. The data provides the reader with the number of applicants and dependents who landed in the province in 2013 and 2014, and who filed tax with Prince Edward Island listed as residency in 2015. The following identifies the one and two year data from 2015 tax filer data: Economic Class 2014 Landed 2015 Resident PA S&D Total PA S&D Total 1 yr Rate NL 305 140 445 200 90 290 65.2% PE 440 465 905 260 245 505 55.8% NS 805 525 1,330 580 380 960 72.2% NB 730 755 1,485 525 500 1,025 69.0% QC 13,725 7,885 21,610 11,200 5,890 17,090 79.1% ON 21,695 12,555 34,250 20,380 11,675 32,055 93.6% MB 4,925 3,695 8,620 4,335 3,250 7,585 88.0% SK 4,310 2,965 7,275 3,405 2,440 5,845 80.3% AB 12,825 8,525 21,350 12,085 8,080 20,165 94.4% BC 9,720 5,585 15,305 8,980 5,100 14,080 92.0% 15
2013 Landed 2015 Resident PA S&D Total PA S&D Total 2 yr Rate NL 280 135 415 165 80 245 59.0% PE 305 285 590 165 140 305 51.7% NS 740 420 1,160 480 280 760 65.5% NB 530 510 1,040 350 305 655 63.0% QC 15,110 8,280 23,390 12,555 6,210 18,765 80.2% ON 16,045 13,595 29,640 14,630 12,375 27,005 91.1% MB 3,755 2,825 6,580 3,225 2,385 5,610 85.3% SK 4,130 2,530 6,660 3,065 1,990 5,055 75.9% AB 8,440 7,235 15,675 7,900 6,810 14,710 93.8% BC 7,895 5,815 13,710 7,105 5,205 12,310 89.8% Business Stream Program Criteria The program criteria for business programs is negotiated with the federal government. There are similarities between provinces for language levels, education requirements, net worth, investment amount, and experience. The chart below compares minimum criteria within seven provinces including Prince Edward Island. Criteria PEI Nova Scotia New Brunswick Manitoba Saskatchewan Alberta British Columbia Language (CLB = Canadian CLB 4 CLB 5 CLB 5 CLB 5 CLB 3 N/A N/A Levels Benchmark) Education High School Certificate High School Certificate 2 years postsecondary High School Certificate 1 Year Post Secondary High School Certificate PSE credential or 100% owner for 3 out of 5 years Net Worth $600,000 600,000 $600,000 $500,000 $500,000 $500,000 $600,000 Investment Amount $150,000 $150,000 $250,000 $200,000 $300,000 (Regina)$200,00 (elsewhere) $500,000 $200,000 16
Recommendation #2: Prince Edward Island introduced an Expression of Interest system in January 2018 using a points based system based on the criteria above. Prince Edward Island is inviting candidates with higher levels of education, language levels and experience then the minimum criteria. It is recommended the minimum criteria negotiated with the federal government for the business streams remain unchanged and be reviewed within 12 months to ensure the criteria is meeting provincial objectives. Active Management To be considered for immigration pathways, foreign nationals must demonstrate their genuine intention to live in Prince Edward Island as described in section 87(2) of the Immigration Refugee Protection Act, S C 2001, c 27 Regulations state that a foreign national is a member of the nominee class if they intend to reside in the province that nominated them and that: Providing active management to the business is a requirement of the Entrepreneurial Stream as set out in the Immigration and Refugee Protection Regulations (IRPR), section 87(6) (c) You must: assume risk and influence the direction of the business; and provide ongoing and active management to the business from within Prince Edward Island; and be present at the business premises on a day-to-day basis. The Prince Edward Island business streams currently require the foreign national to provide documentation confirming they are physically present in the province for not less than 183 days (50%) in the calendar year. Analysis since 2014 noted that one in five approved business applicants are spending more than 100 days per calendar year out of country. Upon review it was noted most provinces require a 75% threshold for time physically present in the province to operate the business. Unrelated to our program requirements, is the federal government s requirement to renew permanent residency every five years which requires two out of five years to be present in Canada. Recommendation #3: It is recommended the Province adjust the time required for a foreign national and dependents to be physically present in the province operating their business from the current 183 days (50%) to 274 days (75%). This will align Prince Edward Island with other jurisdictions. 17
Community Endorsements The Province of Prince Edward Island has entered into agreements with Island communities for the purpose of promoting and encouraging immigration growth throughout Prince Edward Island. At present, eleven Island communities have been meeting with foreign nationals who are committed to establish businesses in their community. The participating community determines the screening process and meets with the foreign national to discuss the business concept. If the community is supportive, they issue an endorsement certificate that is valid for one year. A foreign national that is endorsed can use the associated points (35 outside of capital region or 10 in capital region) in the Expression of Interest system. In addition to community endorsements, the foreign national has points associated with their age, education, business experience, adaptability and language. The province of Prince Edward Island invites foreign nationals with the highest point thresholds to apply to the business streams. The work permit model will support foreign nationals arriving earlier in the province to begin the integration process with communities. Recommendation #4: It is recommended the province adjust the performance agreement for the foreign national to include provisions around community endorsement requirements. With a work permit model, the foreign national will arrive sooner in the community and will only be nominated after all conditions of the performance agreement have been met. Program Integrity The Province of Prince Edward Island is responsible to ensure program integrity measures are in place within the delivery of all programs and services administered by departments and agencies of the province. In addition, the Canada-Prince Edward Island Cooperation Agreement for Immigration references shared responsibility for program integrity that includes the following: a. sharing information and intelligence related to program developments overseas and within Canada, including immigration trends and analysis; b. conducting and disseminating research, and identifying knowledge gaps related to immigration priorities; c. establishing mutual reporting arrangements; d. working collaboratively with other agencies, as required, to address issues relating to inadmissibility, including anti-fraud activities; e. investigating potential program abuse to ensure ongoing rigour and confidence in the immigration program; and f. conducting program evaluations. 18
Verification of Applicant Information Program integrity is the delivery of the right service to the right person for the right reason in a consistent manner. Currently, applicants to the Provincial Nominee Program provide authorization for third party verification to validate information received in support of the application. In addition, foreign nationals are responsible to have their language assessed by the Centre for Canadian Language Benchmarks and to include the assessment to validate language ability. The Centre for Canadian Language Benchmarks is the centre of expertise in support of the national standards in English and French for describing, measuring and recognizing second language proficiency of adult immigrants and prospective immigrants for living and working in Canada. The province requires applicants to submit documentation to validate eligibility and information provided. Information provided is assessed and based on risk factors and reviewed by an independent third party. Recommendation #5: It is recommended that Prince Edward Island continue to explore additional avenues with federal partners and counterparts in Canada to mitigate potential fraud. This includes exploring information sharing agreements to identify opportunities that mitigate risks. Certificate of Legal Advice The Province of Prince Edward Island is committed to ensure applicants to the Provincial Nominee Program have a clear understanding of the legality of program obligations. At present, the applicant is required to submit a legal opinion prepared independent legal counsel. While the legal opinion provided currently varies depending on the counsel, it does consistently contains the various program requirements as required. Recommendation #6: It is recommended the performance agreement include a standardized certificate of legal advice to ensure consistency and a clear understanding of the obligations to the applicant within immigration. Business Longevity Currently the province requires all applicants through our entrepreneur streams to have a business plan completed with financial projections authorized by a Chartered Professional Accountant. The reporting requirements within the require submission of financial statements that meet review engagement standards prepared by a certified accountant. 19
With an aging population there are opportunities for the province to support foreign nationals and Island companies who are interested in succession planning. The province will continue to support the integration of our newcomer communities and engage in activities focused on assisting newcomers to improve business outcomes. This includes assisting organizations such as PEI Connectors to offer guidance and support to foreign nationals purchasing or starting a business. The province will support innovative opportunities that enhance program outcomes. Recommendation #7: The province should explore additional opportunities to support foreign nationals working in collaboration with Island employers through succession planning and significant economic impact to the province. This work should include consultation with the PEI Connectors, Chamber of Commerce representatives and all newcomer support partners. 20
Proposed Performance Indicators The Province of Prince Edward Island reports indicators to the federal government on outcomes. In addition the annual report published on September 30 th each year notes key deliverables. Recommendation #8: It is recommended the Province of Prince Edward Island incorporate key performance indicators in published annual reports. Outcomes Business Streams contribute to federal and provincial economic objectives. Applicants have actively and pursued business in the Province and remain in the Province. Program integrity in the Provincial Nominee Program is maintained. Regional Diversification where foreign nationals are exploring various communities to establish their business in Prince Edward Island. Indicators Number and type of businesses established. Economic contribution of businesses started (determined by taxable income / revenue). Number of businesses purchased as part of succession planning Number of full time and part time jobs created/maintained Number of nominees that continue to live in the province of nomination 6 months and one year after nomination Number of nominees that continue to operate the business in the province of nomination 6 months and 1 year after nomination. Number of additional family members of nominee who have moved to Province of nomination. Number of applications received and decisions made by Province (by approved, refused, withdrawn). Applicant refused by IRCC, by reason of refusal. Number of applicants with established business in community where endorsement was received. Number of communities actively participating in the Community Endorsement process to encourage growth in all communities. 21
Performance Agreement The performance agreement with the foreign national should include provisions that maximize opportunities to meet provincial incomes. A review of other performance agreements has led to a series of considerations by the province. Recommendation #9: The Province of Prince Edward Island should utilize the performance agreement to improve provincial outcomes and implement best practices from other jurisdictions. Maintaining Confidence in Immigration Prince Edward Island is proud of the accomplishments of our immigration programs including business entrepreneurs. We will continue to showcase success achieved and will work with our ethno-cultural groups and partners to support integration efforts. Our province has benefited from the diversity that exists and the talent and innovation from our newcomer community. It is important to celebrate the success of our candidates and we will continue to profile the success on our website and our YouTube channel. Our YouTube Channel http://www.youtube.com/c/officeofimmigrationprinceedwardisland 22